What are the penalties for late, missing or false certified payroll?

What happens if a certified payroll is late or missing?

The agency can stop paying the contract. Certified payroll is due weekly, within 7 days after the regular payment date for the payroll period (29 CFR 3.4(a)). If a contractor or subcontractor fails to submit the required records, the agency may, after written notice, take action to suspend any further payment, advance or guarantee of funds until the violation stops (29 CFR 5.5(a)(2)(i) and (a)(3)(iv)(B)).

The same paragraph adds two more consequences:

• Failing to submit records on request, make them available, or allow worker interviews on the job can be grounds for debarment under 29 CFR 5.12.
• A contractor that doesn't produce required records to the DOL's Wage and Hour Division within the time it asks can't use those records later as evidence in an administrative proceeding under 29 CFR part 6. WHD considers reasonable requests for more time.

Because the prime is responsible for submitting every subcontractor's certified payroll (29 CFR 5.5(a)(3)(ii)(A)), a sub's missing payroll is the prime's responsibility too.

What happens if workers were underpaid?

The contractor owes back wages, with interest. When an underpayment is found, the agency or DOL asks for restitution to the workers, or to their fringe benefit plans, with interest from the date of the underpayment. Interest is figured at the IRS underpayment rate under 26 U.S.C. 6621 and compounded daily (29 CFR 5.10(a)).

To cover it, the agency may withhold accrued payments on its own, and must withhold when DOL asks in writing (29 CFR 5.5(a)(2)(i)). DOL can pay the workers directly from the withheld money. If that isn't enough, workers can sue the contractor and its sureties (40 U.S.C. 3144(a)). DOL's claim to withheld funds comes ahead of sureties, the agency's reprocurement costs, bankruptcy trustees, assignees, successors and Prompt Payment Act claims (29 CFR 5.5(a)(2)(ii)).

On contracts over $100,000 that are subject to the Contract Work Hours and Safety Standards Act, unpaid overtime also carries liquidated damages of $33 per worker for each calendar day the worker worked over 40 hours in the week without the overtime pay (29 CFR 5.5(b)(2)).

Can a contractor be debarred?

Yes, for 3 years. When the Secretary of Labor finds that a contractor or subcontractor disregarded its obligations to workers or subcontractors, the contractor, its responsible officers and any firm they have an interest in become ineligible for 3 years for any federal contract or subcontract and any contract covered by the Davis-Bacon and Related Acts (29 CFR 5.12(a)). Names are published on SAM.gov, and the 3 years run from the date of publication. The statute bars awards to listed contractors for the same 3 years (40 U.S.C. 3144(b)).

Before debarment, DOL sends notice of its findings, and the contractor has 30 days to request a hearing (29 CFR 5.12(b)). A breach of the contract clauses can also be grounds for terminating the contract (29 CFR 5.5(a)(7)). By signing a covered contract, a contractor certifies it isn't debarred, and a covered contract can't be subcontracted to a debarred firm (29 CFR 5.5(a)(10)).

What changed in the 2023 rule for primes and cross-withholding?

Two things reach past the sub that made the mistake. The DOL's final rule was published August 23, 2023 (88 FR 57526), took effect October 23, 2023, and applies to contracts entered into after that date.

Cross-withholding. Money to cover back wages can be withheld from the contract where the violation happened, from any other federal contract with the same prime, or from any other federally assisted contract with the same prime that's subject to Davis-Bacon labor standards, even if a different agency awarded it (29 CFR 5.5(a)(2)(i) and 5.9(b)). The rule's definition of "prime contractor" includes controlling shareholders or members, joint venture partners, and a general contractor delegated to oversee all or substantially all of the construction, and related entities count as the same prime (29 CFR 5.2). Cross-withholding from a different legal entity's contract requires that its contract included the withholding clause (29 CFR 5.9(c)).

Flow-down liability. The subcontract clause in the 2023 rule says the prime is responsible for compliance by every subcontractor and lower-tier sub. If the clauses are violated, the prime and any responsible subcontractors are liable for unpaid wages and monetary relief, with interest, owed to workers of lower-tier subs, and may be debarred (29 CFR 5.5(a)(6)).

On June 24, 2024, a federal court in the Northern District of Texas enjoined three other provisions of the rule, none of them the withholding, flow-down or debarment provisions above. DOL's page says the rest of the rule remains in effect.

What are the penalties for a false certified payroll?

Criminal and civil. The regulation says falsifying the statement of compliance may subject the contractor or subcontractor to civil or criminal prosecution under 18 U.S.C. 1001 and 31 U.S.C. 3729 (29 CFR 5.5(a)(3)(ii)(F)), and the Copeland Act applies section 1001 to the weekly wage statements (40 U.S.C. 3145(b)).

The warning above the signature line on the WH-347 (Rev. January 2025) says willful falsification may bring civil or criminal prosecution under those two statutes and debarment. When an agency or DOL finds substantial evidence that violations are willful and break a criminal statute, the matter goes to the Attorney General (29 CFR 5.10(b)).

What about state prevailing wage jobs?

This page covers the federal rules. For a job under a state prevailing wage law, see the state's page: California, New York, New Jersey, Illinois, Washington, Massachusetts, Pennsylvania, Ohio, Maryland and Oregon.